Yahoo Finance What to watch: Burberry donates 100,000 pieces of PPE, Sports Direct resolves tax dispute, and stocks fall
Here are the top business, market, and economic stories you should be watching today in the UK, Europe, and abroad:
Burberry donates 100,000 pieces of PPE
Burberry (BRBY.L) has donated 100,000 pieces of personal protective equipment (PPE) to the NHS and charities, the fashion house said on Friday.
Burberry said its trench coat factory in Castleford, UK, was now manufacturing non-medical gowns and sourcing surgical masks through its supply chain.
The company also pledged to keep paying all staff full pay despite store closures and said it would not tap the government’s worker furlough scheme for wage support. Senior managers will take a temporary 20% pay cut.
Chief executive Marco Gobbetti said Burberry was “committed to safeguarding jobs and supporting the relief efforts during this global health emergency.”
Burberry’s board will also donate 20% of their pay to a new fund set up to fight COVID-19.
Sports Direct resolves tax dispute
Frasers Group (FRAS.L), the parent company of Sports Direct, has resolved a €674m (£588m) dispute with the Belgian tax authority.
The company said it took the “decision to settle these matters now given the uncertainty” affecting its finances and said “no material sums” were paid as part of the resolution.
Frasers Group also told shareholders that the company was not “accepted as eligible” for the Bank of England’s Covid Corporate Financing Facility (CCFF).
Stocks fall after coronavirus trial of Gilead's remdesivir flops
Stocks around the world fell on Friday as hopes for an effective treatment for COVID-19 were dashed.
Stock markets in Asia closed lower and European stocks opened in the red on Friday, after reports that a closely watched trial of a possible COVID-19 drug performed poorly in randomised trials.
The Financial Times reported late on Thursday that a clinical trial of antiviral remdesivir failed to show any meaningful results in treating the novel coronavirus, citing World Health Organisation (WHO) documents.
Gilead confirmed it had abandoned the trial in China but insisted the results had been “inconclusive.”
The DAX (^GDAXI) opened down 1.6% in Germany, while the CAC 40 (^FCHI) was down 1.4% in France. European investors were also disappointed by the failure of EU leaders to reach a deal on stimulus after a digital summit on Thursday evening.
In the UK, the FTSE 100 (^FTSE) slipped 1.2%. Stats released on Friday morning pointed to the sharpest fall in retail sales on record as a result of the COVID-19 lockdown.
Overnight in Asia, Japan’s Nikkei (^N225) closed down 0.8%, the Hong Kong Hang Seng (^HSI) ended trade down 0.3%, and the Shanghai Composite (000001.SS) in China traded down 1%.
US futures were pointing to a lower open in New York. S&P 500 futures (ES=F) were down 0.3%, Dow Jones futures (YM=F) were 0.1% lower, and Nasdaq futures (NQ=F) were off 0.4%.
‘Retail armageddon’ for UK shops
UK retailers suffered their steepest fall in sales on record in March, official figures show as the coronavirus lockdown ravages the sector.
Office for National Statistics (ONS) figures published on Friday showed a 5.1% slump in the volume of sales between February and March, the biggest fall since the data series began.
The dismal figures sparked warnings of “retail armageddon” and a steep drop in Britain’s quarterly GDP, with a separate survey also showing consumer confidence near record lows.
Many stores were forced to shut up shop by the government’s lockdown announcement on 23 March, and April figures are widely expected to be even worse.
Pressure on government to back 100% of coronavirus loans
The Treasury is facing growing calls to guarantee 100% of loans made to small businesses in a bid to speed the flow of cash to companies and prevent a wave of bankruptcies.
The Confederation of British Industry (CBI) and the Federation of Small Businesses (FSB) both renewed calls on Thursday for the government to increase the state guarantee on coronavirus loans from 80% to 100% for smaller businesses.
It adds to growing pressure on Chancellor Rishi Sunak to offer even greater support to Britain’s smallest businesses to ensure they don’t collapse. Bank of England governor Andrew Bailey, former Chancellor George Osborne, and the head of industry group UK Finance have all backed calls for an increased state guarantee.
Treasury urged to relax venture capital rules
The government is being urged to relax rules governing venture capital trusts (VCT) to allow them to support companies struggling due to the coronavirus pandemic.
Stuart Veale, chair of the Venture Capital Trust Association (VCTA), told Yahoo Finance UK his organisation had sent proposals to the Treasury that would allow VCTs to invest more money into companies they have already backed.
The VCTA, which represents 75% of the sector, estimates at least £500m is sitting on balance sheets waiting to be invested.
“The great thing for the government is there’s no additional cost for this scheme because they’ve already given the tax relief,” Veale said. “Just by changing the regulation they could immediately free up half a billion pounds of investment which could be channelled to UK SMEs.”
3.2 million furloughed workers 'may not get their jobs back'
Many of Britain’s 3.2 million or more furloughed workers “may not get their jobs back” after the UK begins to lift its coronavirus lockdown, according to a leading labour economist.
Danny Blanchflower, a former member of the Bank of England’s monetary policy committee, told Yahoo Finance UK Britain’s unemployment rate could skyrocket to 20%, including furloughed workers. With job losses mounting as the lockdown has paralysed the economy, it would be five times above the current official rate of 4%, based on February data.
More than 1.5 million people have applied recently for Britain’s main unemployment benefit universal credit, but official figures show at least 3.2 million workers have also been furloughed on a government scheme. Business surveys suggest real furlough numbers could be millions higher.
